Dated 19th November, 2019

 Larger period of limitation cannot be invoked when the facts are known from the records maintained by the Appellant

Larger period of limitation cannot be invoked when the facts are known from the records maintained by the Appellant 1

Facts of the Case

The T.G.S. (hereinafter referred to as “Appellant”) had provided "Commissioning and Installation" and "Maintenance or repair services" without payment of Service Tax to sister unit. During the checking of records of the Appellant by Preventive Team of the Revenue, the Appellant appeared to have taken input/ service credit for providing above services. Accordingly a show cause notice was issued alleging that the contract entered into between the Appellant and the sister unit’s evidence the Appellant as an independent service provider and consequently, the receipt of service by sister unit was liable to service tax which is not a service rendered to the self. Thereafter, the demand was confirmed on the ground that, no satisfactory documentary evidence is furnished proving there was no service recipient rather service is for self.

Contention of the Appellant

The Appellant contended that the contract and the provision of service was only by one unit to another unit which is otherwise a service for the self and therefore, there was no liability to service tax. It was further submitted that the show cause notice was issued thereby invoking extended period of limitation. However, all the details as to the alleged suppression had been picked up only from the records maintained by the Appellant, by the Preventive Team of the Central Excise Headquarters. Therefore, the demand is not justified on the ground of limitation itself.

Contention of the department

The departmental representative (hereinafter referred to as “Ld. DR”) of the Revenue submits that there is a valid contract entered into by the Appellant with the service tax recipient proving independent status of both entities. Also, as far as income tax is concerned, they have obtained different PAN which is mandatory for obtaining Service Tax registration. The Ld. DR also drew attention to various clauses in the contract to buttress that both are different entities and that there is no service to self as contended by the Appellant. Moreover, Ld. DR pointed out that the gross price is shown to include service tax and education cess along with Arbitration clause in case of any disputes arising on account of the contract.

Decision of Hon’ble Tribunal

From the perusal of the documents and the explanations filed by the Appellant, Hon’ble Tribunal noted that there was no satisfactory documentary evidence furnished to claim the transaction as self service. It was also found that the Adjudicating Authority has given a finding on the contentions of the Appellant; that the services rendered by the Appellant was for consideration and that in case of orders for executing service, the Appellant had sub-contracted after making payment for which, the Appellant had also taken credit for the service tax amount charged. There is also a finding by Ld. Commissioner that the Appellant did indeed allot vendor code and ledger to sister unit by treating the other as its customers on which there is no refutal/rebuttal by the Appellant and it is also a part of the record that the services rendered were the results of open bidding/tender where even the Appellant amongst others, participated.

On being successful, purchase order was placed and the contract came up executed. On considering above discussions by the Ld. Adjudicating Authority, suffice it to say that the Appellant has failed to prove that it is the case of 'Self Service' but the Revenue has clearly established that there exists service, there is a service provider, there is also a service recipient; and for which the payment has been made. In the backdrop of the above, therefore, we are of the humble opinion that the decisions relied onby the Ld. Senior Advocate are distinguishable.

However, it is a matter of record that the Revenue has come to know of the above facts only during the course of checking of records and not from an independent source and therefore, the same cannot be said to have been suppressed with an intention to evade tax and consequently, the demand cannot be raised beyond of the normal period. Moreover, there is no specific allegation of suppression, fraud, etc, to justify invoking larger period of limitation. Thus the demand only for the normal period of limitation alone can be sustained. Hence the matter is remanded back to the file of the Adjudicating Authority for working out for liability, if any, for the normal period alone. Matter is partly allowed and partly remanded on the above terms.

1 M/s Tata Steel Ltd Vs Commissioner of Central Excise and Service Tax [2019-TIOL-2932-CESTAT-KOL]

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